The Canadian dollar surrendered its gains on Tuesday against its U.S. counterpart after posting a fresh one-week high, with trading confined to a narrow range ahead of Wednesday’s interest rate decision by the Bank of Canada.
Cautious trading for the loonie came as nervous investors sought shelter in gold, Treasuries and the yen, while growing tensions over Syria put the U.S. administration and Russia on a collision course. The Bank of Canada is widely expected to hold rates at 0.50 percent and may stick to its cautious tone given the number of uncertainties facing the Canadian economy, particularly U.S. trade policy.
Still, the strength of recent domestic data has pointed to a pickup in Canada’s economy and economists expect the central bank could raise its first-quarter growth forecast.
At 9:31 a.m. ET (1331 GMT), the Canadian dollar was trading at C$1.3332 to the greenback, or 75.01 U.S. cents, unchanged from Monday’s close.
The currency’s weakest level of the session was C$1.3335, while it touched its strongest since April 3 at C$1.3311.
Prices of oil, one of Canada’s major exports, edged back from a five-week high as rising U.S. shale oil production weighed against support from tensions in the Middle East and production cuts in Organization of the Petroleum Exporting Countries and other states. U.S. crude prices were down 0.02 percent to $53.07 a barrel.
Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year price rose 2.5 Canadian cents to yield 0.749 percent and the 10-year climbed 24 Canadian cents to yield 1.571 percent.
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